Bills Digest no. 183 2006–07
Agricultural and Veterinary Chemical (Administration)
Amendment Bill 2007
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
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a change in the governance arrangements for the
APVMA from a board template to an executive management
making the APVMA subject to the provisions of
the Financial Management and Accountability Act 1997 (the
FMA Act), rather of the Commonwealth Authorities and Companies
Act 1997 (the CAC Act).
the replacement of the current governing board
with a Chief Executive Officer (CEO).
the establishment of an Advisory Board,
consisting of up to nine part-time members appointed by the
Minister and mandated to provide advice and recommendations to the
The Explanatory Memorandum makes a special
point of mentioning that in crafting these amendments, care has be
taken not to interfere with the continued viability of the body
corporate which is the APVMA, given that State and Northern
Territory legislation has conferred functions and powers upon it.
The amendments have been made keeping in mind the highly valued
Commonwealth and State Territory cooperative arrangements which
serve as the linchpin for the national regulatory scheme for
agricultural and veterinary chemicals.(2)
The amendments in the Bill respond to the
relevant findings of the Review of the Corporate Governance of
Statutory Authorities and Office Holders (the Uhrig Review)
conducted by Mr John Uhrig AC in 2003. They also follow an
assessment of the APVMA against the Uhrig
As part of its 2001 election platform, the
Coalition Government signalled its intention to examine the
efficacy of the governance arrangements of statutory authorities
In November 2002, the Government announced a
review of the governance practices of Commonwealth statutory
authorities and office-holders, with special focus on those
agencies which impact on the business community. The Prime
Minister, the Hon. John Howard, appointed Mr John Uhrig, AC, to
head the review. The objective of the review was to examine and
evaluate governance arrangements and practices and provide options
for the Government to improve the performance and get the best from
statutory authorities, their office holders and their
accountability frameworks .(4) In doing so, the
Government noted the impact that the performance of statutory
authorities and office-holders has on business and the overall
health of the Australian economy. In particular, the review was to
focus on the areas where businesses have the right to expect the
highest levels of efficiency, fairness and transparency in their
dealings with government.
A key task was to develop a broad template of
governance principles that, subject to consideration by government,
might be extended to all statutory authorities and office
As part of the process of developing a broad template, the review
was asked to consider the governance structures of a number of
statutory authorities and office holders with critical
relationships with business and to consider best practice corporate
governance structures in both the public and private
The report recommended that two templates
should apply to ensure good governance of statutory authorities:
agencies should either be managed by a Chief Executive Officer
(CEO) or by a board structure. Both templates detail measures for
ensuring the boundaries of responsibilities are better understood
and the relationship between Australian government authorities,
Ministers and portfolio departments is made clear.(6)
However, as Uhrig explained, the purpose of the template is to
serve as a reference point for the development of governance
arrangements and so it is expressed as an ideal .(7)
Uhrig recommended that the selection of the
management template and financial frameworks to be applied should
be based on the governance characteristics of a statutory
For a summary of the responses and debate that
followed the release of the review, please refer to Dr. Richard
Uhrig Review and the future of statutory authorities ,
Research Note, no. 50, Parliamentary Library, 2004 05.
Nearly all Commonwealth government bodies fall
under the Financial Management and Accountability Act 1997
(the FMA Act) or the Commonwealth Authorities and Companies Act
1997 (the CAC Act).
The FMA Act focuses primarily on the
obligations and responsibilities of Chief Executives and the way
officials handle public money, public property and other resources
of the Commonwealth. The FMA Act applies to budget-funded
authorities managed by a CEO, and establishes various management
and reporting responsibilities for the CEO (sections 44 46, 49
and 51), as well as allowing the relevant Minister to give
guidelines to the CEO (section 64). Furthermore, the FMA Act
provides an accountability framework for CEOs to manage agency
The CAC Act, on the other hand, requires
directors and officers to exercise their powers and duties in the
best interests of the body and for a proper purpose. Directors
duties apply to help ensure that prudent decisions are made on the
resources that, as a matter of law, the body holds in its own
right. The CAC Act applies to authorities that are corporate
entities managed by a board. It requires the head of the board to
report to the responsible Minister (sections 15 16), and to ensure
that the authority s activities comply with government policies
(section 28). A board structure is favoured if there is a strong
commercial focus to the organisation, or if the agency is
As at 15 May 2007, there were 94 FMA Act
agencies and 99 CAC Act agencies.(9) The Department of
Finance and Administration publication Governance
Arrangements for Australian Government Bodies (August
2005) provides further explanation on the FMA Act and CAC Act and a
comparison between the two pieces of legislation.
On the basis of the findings of the Uhrig
Review, Ministers and their Departments have been undertaking an
assessment of their portfolio agencies against the governance
templates.(10) The Minister for Finance and
Administration has assumed a coordinating role in these
reviews.(11) Thus, a number of similar Acts have been
passed by Parliament incorporating Uhrig Review
The APVMA is responsible for administering and
managing the parts of the National Registration Scheme that oversee
the supply and use of animal health and crop protection products in
Australia. The APVMA does this with the State and Territory
governments and with the active involvement of other Australian
Within the National Registration Scheme, the
APVMA assesses and registers pesticides and veterinary medicines
before they can be supplied or used. All registered products must
work, be safe to people and the environment and not jeopardise
Australia s trade with other nations. (12)
The Explanatory Memorandum states that no
financial impact is anticipated.
It is proposed that the Governing Board of the
APVMA along with the office of Director be abolished and replaced
by an Advisory Board with a Chair, and a new position of CEO.
Items 1 8 repeal some definitions and insert
others so as to reflect these revised governance arrangements
incorporating an executive management structure.
Item 12 is a consequential
amendment designed to reflect the fact that the function currently
performed by the Chairperson of the Governing Board, will be vested
in the CEO. Items 15-17, 19 and
30 are also consequential amendments.
Paragraph 7(3) (a)
of the AVCA Act provides that the APVMA has power to do all things
necessary or convenient to be done in connection with the
performance of its functions . Item 9
proposes that a note be inserted
at the end of paragraph 7(3) (a) stating that the CEO may also
enter into contracts on behalf of the Commonwealth. This proposed
insertion is made pursuant to section 44 of the FMA Act which is
concerned with the special responsibilities of a CEO in promoting
efficient, effective and ethical use of the Commonwealth s
The Explanatory Memorandum states that the
APVMA retains its existing powers under subsection
7(3) of the AVCA Act, including the power to enter into
contracts in its own name (refer to paragraph (a)). These powers
are integral to the viability of the cooperative scheme for the
management of agricultural and veterinary chemicals in Australia,
and they reside with the APVMA body corporate. This has been made
possible as a result of each of the States and Northern Territory
passing complementary laws conferring identical power on the APVMA.
To give these powers to the CEO would necessitate a change to State
and Territory laws.
The APVMA will continue to be a statutory
authority of the Commonwealth with a separate legal identity from
the Commonwealth. The APVMA will also retain its powers to enter
into contracts; acquire, hold and dispose of real and personal
property; occupy land; appoint agents; and do anything incidental
to its powers. However, the effect of making the APVMA subject to
the FMA Act is that the assets and liabilities of the APVMA become
the assets and liabilities of the Commonwealth. The
amendments proposed by item 10
give effect to the changes and continuities mentioned in this
The Agvet Code was introduced through
Commonwealth legislation in 1994, i.e. the Agricultural and
Veterinary Chemicals Code Act 1994. The Agvet Code regulates
the registration of agvet chemical constituents or products.
Section 34G of the Agvet Code makes it compulsory for the APVMA to
publish a summary of the advice received from a person, body or
government it consults under sections 8 or 8A of the AVCA Act, if
the APVMA relies on that advice to make a decision under the Agvet
Code to grant an application for registration or approval.
However, under the current AVCA Act, the APVMA
is not required to publish a section 34G summary in respect of
advice that the CEO receives from the APVMA governing board.
Item 11 proposes a new subsection
8(3) designed make it clear that the APVMA does not
consult the new Advisory Board for the purposes of section 8 when
the CEO requests information from the Advisory Board.
According to the Explanatory Memorandum, the
rationale for this proposed amendment is that to require the CEO to
publish a summary of advice received from the Advisory Board would
add considerably to the APVMA costs and would lengthen registration
and approval timeframes.(13) However, given the primacy
accorded to accountability by the Uhrig Review, perhaps it may have
been useful for the Explanatory Memorandum to provide an estimation
or description of the costs of requiring such advice to be
Section 10 of the current AVCA Act provides
that the Minister may give written directions to the APVMA
concerning the performance of its functions or the exercise of its
powers, and the APVMA must comply with any such direction .
Significantly, subsection 10(3) requires that if the Minister does
give a direction, then the Minister must provide notice setting out
particulars of the direction to be published in the
Gazette and table that notice before each house of
Parliament. The current situation is that even if a direction is
tabled by the Minister, it is not disallowable.
subsection 10(4) of the AVCA Act suspends the requirement in
subsection 10(3) in relation to a particular direction if the
Minister determines, in writing, that compliance with the
subsection is undesirable because it would, or would be likely to,
be prejudicial to the national interest of Australia .
Such a discretion does not exist under the
Legislative Instruments Act 2003, however, the Explanatory
Memorandum rationalizes that it may be of particular importance
with up-and-coming issues such as the management of security
chemicals. Hence, the Government has decided that a Ministerial
Direction under subsection 10(1) should remain a non-legislative
instrument for the purposes of the Legislative Instruments Act
2003. Item 13 therefore proposes a repeal of
the existing subsection 10(5) and
substitutes a new subsection that explicitly
provides that a direction under subsection 10(1) is not a
The proposed section 10A is
designed to make it clear that the general power of the Minister to
give directions to the APVMA under section 10, does not also
empower the Minister to direct the CEO in relation to the CEO s
performance of functions, or exercise of powers, granted generally
under the FMA Act and the Public Service Act 1999.
Item 21 repeals
sections 14 to 19 which related to the directors
of the previous governing board of the APVMA, and proposes
new sections relating to the establishment, composition,
functions and powers of the Advisory Board.
Proposed section 15: the
Advisory Board will consist of up to nine part-time Board
Proposed subsection 16(1):
the Advisory Board is to provide advice and make recommendations to
the CEO in relation to the performance of a function or the
exercise of a power of the APVMA. Proposed subsection
16(2) provides that the Advisory Board has the power to do
all things necessary or convenient to be done for or in connection
with the performance of its function. However, proposed
subsection 16(3) makes it clear that the Advisory Board
cannot give any directions to the CEO.
Proposed section 17 provides
for the appointment of members of the Advisory Board. Board members
are appointed by written instrument by the Minister on a part-time
basis. Proposed section 18 provides that a Board
member holds office for a period specified in the instrument of
appointment and that the period must not exceed three years.
Proposed subsection 19(1)
provides that a Board member s remuneration is to be determined by
the Remuneration Tribunal, or if no determination is in operation,
then member is to be paid such remuneration as is prescribed.
Proposed subsection 19(3)
anticipates a broad field of candidates for position of Board
member. Accordingly this section provides that,
If a person who is a Board member:
is a member of the Parliament of a State;
is a candidate for election to the
Parliament of a State and, under the law of the State, would not be
eligible to be elected as a member of that Parliament if the person
were entitled to remuneration or allowances under this Act;
is in service or employment of a State, or
of an authority of a State, on a full‑time basis; or
holds or performs the duties of an office or
position established by or under a law of a State on a
the person must not be paid remuneration or
allowances under this Act, but is to be reimbursed the expenses
that the person reasonably incurs in performing duties under this
Proposed subsection 17(4)
provides that the Minister must consult the CEO before appointing a
person as a Board member or as the Chair. This is thought to be
appropriate as it is the CEO who is intended to be assisted by the
advice of the Board.
Proposed subsection 17(2)
provides that when appointing the nine members, the Minister must
ensure that the following skill composition is achieved:
two Board members have experience in the
regulation, under State or Territory law, of chemical products;
one Board member has experience in the
agricultural chemical industry; and
one Board member has experience in the
veterinary chemical industry; and
one Board member has experience in primary
one Board member has experience in
environmental toxicology, including knowledge of the effect of
chemicals in ecosystems; and
one Board member has experience in
protecting consumer interests; and
one Board member has experience in public
health and occupational health and safety; and
if the Minister considers it necessary one
Board member has experience in a field relevant to the APVMA s
The experiential make-up of the Advisory Board
is similar to that of the current governing board, with the
addition of experience in toxicology and public health. The
Explanatory Memorandum states that the experiential composition of
the Advisory Board is designed to complement the role and
responsibilities of the APVMA and includes representation from each
stakeholder sector .(14)
Item 25: Proposed sections 23
and 24 - Disclosure of interests of board members
This item repeals section 23 and 24 under the
current AVCA Act that require directors to disclose financial
interests in certain circumstances, and provide for the termination
of director s appointments. New sections 23 and 24
are proposed and these sections are respectively headed
Standing obligation to disclose interests and
Termination of appointment .
Proposed subsection 23(1)
provides that a Board member must give written notice to the
Minister of any direct or indirect financial interest that the
member has if that interest could conflict with the proper
performance of the Advisory Board s function. Notice is required
whether or not there is any particular matter under consideration
that gives rise to an actual conflict of interest . It does not
matter if the interest is acquired before or after the Board member
s appointment (proposed subsection 23(2)).
Proposed subsection 23(3)
provides that notice must be given to the Minister as soon as
practicable after the Board member becomes aware of the potential
for conflict of interest. Proposed subsection
26(8) provides that if a Board member has such an interest
that could conflict with the Board s advisory role in relation to a
matter being considered, or about to be considered at a meeting,
then this must be disclosed so that the CEO is aware of a conflict
that may adversely affect the quality of the advice provided by the
Advisory Board. Proposed 26(9) requires that such
a disclosure, and any action taken in relation to that disclosure,
be contained in the minutes. Interestingly, there is no proposed
amendment designed to possibly prevent a Board member from
participating in the provision of advice on the matter in which
they have disclosed a conflict of interest.
Proposed section 24 provides
that the Minister may terminate the appointment of a Board member.
It may be noteworthy that this power is entirely discretionary, and
contrasts with the listed circumstances in which a director s
appointment may be terminated by the Minister under existing
section 24 of the current Act. The functions of the Advisory Board
are to be the same as the previous board of directors and as such
there does not appear to be a reason for this significant
Proposed subsection 26(1)
provides that a CEO must hold sufficient meetings with the Advisory
Board as are necessary for the efficient operation of the APVMA s
Proposed subsection 26(2)
provides that the meetings are to be held at the times and places
that the CEO determines.
Proposed subsection 26(4)
provides that the CEO may determine the procedure to be followed at
or in relation to meetings, including matters such as: the quorum
for meetings and regulating the way in which meetings are
conducted. This is designed to provide the CEO with sufficient
control of the meetings so as to yield the advice required by the
CEO in order to manage the affairs of the APVMA.
Proposed subsection 26(5)
contributes to accountability and transparency by requiring that
minutes of meetings held between the CEO and the Advisory Board are
Proposed subsection 26(6)
provides that the portfolio Secretary, or a person authorised by
the Secretary, may attend meetings held by the CEO and the Advisory
Board. This amendment has been inspired by Uhrig Review. The Uhrig
report posited that:
Departments are the primary source of public
sector advice to Ministers and are best placed to support Ministers
in the governance of statutory authorities. In this respect, the
portfolio secretary has a role akin to an advisory function within
a parent company in providing advice to the CEO about the
activities of the company s subsidiaries.(15)
It is therefore not surprising that one of the
recommendations of the Uhrig Review was that:
[in order] to assist in the advisory board s
considerations, particularly in relation to the background of the
policy and options for implementation, adequate public sector
representation should occur through the relevant portfolio
secretary and statutory authority head also attending
Proposed subsection 26(7)
provides that the CEO may invite a person other than a Board member
or the Secretary to attend a meeting for the purpose of advising or
informing it on any matter. This amendment reflects a commitment to
ensuring that the Advisory Board has access to persons with
relevant knowledge and expertise so as to assist the Board in
performing its function optimally.
Proposed subsection 26(10)
provides that the proposed subsections 26(1) to
26(4) apply to hearings held by the APVMA in the same way
that those provisions apply to meetings held by the CEO with the
The Advisory Board may meet in the absence of
the CEO with the purpose of preparing advice for the CEO.
Proposed subsections 27(1) to
27(4) essentially mirror proposed
subsections 26(1) to 26(5), while
proposed subsections 27(5) and
27(6) mirror proposed sections 23 and
29A deals with the remuneration and allowances of
Committee members. The provisions essentially mirror those proposed
by item 19 for Advisory Board members.
Proposed subsection 32A(1)
provides that the CEO, in performing the duties of the office must
take into account the advice and recommendations provided by the
Advisory Board. This does not mean that the CEO is bound by the
advice given by the Advisory Board.
Proposed subsection 32A(2)
provides that the CEO must keep the Advisory Board informed of the
performance of the APVMA s functions and give the Advisory Board
reports, documents and information in relation to the APVMA s
functions as the Chair requires for the performance of the Advisory
Board s functions. Hence, the Chair of the Advisory Board cannot
simply obtain any or all documents related to the APVMA s
functions, but rather only those that are necessary for the Board
to carry out its functions.
Proposed subsection 32A(3)
provides that the CEO may attend meetings of the Advisory Board if
invited by the Chair.
Proposed subsection 33(1)
provides that the CEO is to be appointed by the Minister on a
Proposed 33(2) provides that
a person who is a member of the Advisory Board is not eligible to
be appointed as the CEO.
Proposed subsection 35(1)
provides that the CEO is to be paid such remuneration as is
determined by the Remuneration Tribunal, or if no determination is
in operation, the CEO is to be paid such remuneration as is
Proposed subsection 35(2)
provides that the CEO is to be paid such allowances as a determined
by the Minister.
Proposed subsection 41A
provides that the Minister may terminate the appointment of a
for misbehaviour or physical or mental
if the Chief Executive Officer:
if the Chief Executive Officer is absent,
except on leave of absence, for 14 consecutive days or for 28 days
in any 12 months; or
if the Chief Executive Officer engages,
except with the Minister s approval, in paid employment outside the
duties of his or her office; or
if the Chief Executive Officer fails,
without reasonable excuse, to comply with the disclosure of
interests requirement; or
if the Minister is satisfied that the Chief
Executive Officer s performance has been unsatisfactory.
Proposed section 42 requires
that the CEO disclose to the Minister all direct and indirect
financial interests that the CEO has or acquires in any business or
in any body corporate carrying on any business.
Proposed section 45 provides
that staff of the APVMA are to be engaged under the Public
Service Act 1999.
Proposed subsection 50(1)
mandates that the APVMA develops a corporate plan in written form
for a period that is specified in the plan and that the plan must
both define the key objectives of the APVMA in performing its
functions during the period, and provide a broad outline of the
strategies to be pursued by the APVMA to achieve those stated
Proposed subsection 51(1)
requires APVMA to provide the Minister with a copy of the corporate
plan for his or her approval on or before 1 June in each calendar
year, except where exempted from this requirement by the
new subsection 51(2), or on a later date that the
Minister allows. This advice notice of the plan enables the
Minister to properly consider the plan so as to exercise his
discretion in relation to the plan.
Proposed subsection 51(3)
provides that a corporate plan comes into effect on the day that it
is approved by the Minister or the first day of the period to which
it relates, whichever is the later.
Proposed subsection 52(1)
provides that the APVMA may at any time, review a corporate plan
and consider whether a variation to the plan is necessary.
Proposed subsection 52(2)
provides that following a review of a plan under
52(1) the APVMA may vary the plan provided there
is Ministerial approval for the variation.
Proposed subsection 52(3)
provides that the Minister may, at any time, request the APVMA to
vary a corporate plan, whether or not it has come into force. And,
the APVMA must comply with this request for a variation of the plan
(proposed subsection 52(4)).
Proposed subsection 52(6)
allows the APVMA to vary the corporate plan without Ministerial
approval where the variation is minor. However, the Minister must
be informed of this minor variation in writing as soon as
practicable (proposed subsection 52(7)). This is
consistent with moving to the Uhrig template and APVMA being
subject to the FMA act rather than the CAC Act.
Proposed subsection 58(2)
provides that Australian Pesticides and Veterinary Medicines
Special Account is a Special Account for the purpose of the FMA
Act. This is necessary because the operating costs of the APVMA are
recovered from the industry that it regulates through the
collection of levies and fees. The Special Account provides for
clear identification and reporting of those of funds.
Proposed sections 59 and 60
provide details of how the Special Account established under 58(2)
is to be administered.
As already noted, this Bill is one of series
introduced by the Government designed to make relevant and
appropriate reforms in response to observations and conclusions
made by the Uhrig Report. It also responds to a recent assessment
of the APVMA. The specific amendments are designed to improve and
strengthen the governance arrangements of the APVMA.
Memorandum, p. 2.
- Second reading
speech: Agricultural and Veterinary Chemicals (Administration) Bill
2007 , House of Representatives, Debates, 10 May
2007, p. 10.
- Senator the Hon. N.
Government Response to Uhrig Report, media release, 12
- J. A. Uhrig, AC,
Review of the Corporate Governance of Statutory
Authorities and Office Holders, Canberra, June 2003, p.
- Senator the Hon. N.
Minchin, op. cit.
- Uhrig, op. cit., p.
- ibid., p. 12, point
- Department of Finance
and Administration, Chart of 94 Agencies under the Financial
Management and Accountability Act 1997 (FMA Act), Chart of 99
bodies under the Commonwealth Authorities and Companies Act 1997
(CAC Act) , http://www.finance.gov.au/Publications/docs/FMA_CACFlipchart.pdf,
accessed on 22 May 2007.
- More than 160
Australian Government Agencies are being assessed against the Uhrig
Report principles and templates . Sussan Ley, MP, Parliamentary
Secretary to the Minister for Agriculture, Fisheries and Forestry,
Second reading speech: Primary Industries and Energy Research and
Development Amendment Bill 2007 , House of Representatives,
Debates, 1 March 2007, p. 10.
- Introducing the
Australian Pesticides and Veterinary Medicines Authority,
Memorandum, p. 7.
- ibid, p. 10.
- Uhrig, op. cit., p.
- ibid, p.93 94.
15 June 2007
Bills Digest Service
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